Consumer body Choice will push for the financial planning industry to adopt an hourly fee structure and ban both commissions and asset-based fees.
"We are concerned that asset-based fees still remain in the industry. While these fees can be closed by the client, the structure still has features similar with commissions, which leads to market distortion," Choice spokesperson Christopher Zinn said.
He said asset-based fees still had an incentive payment structure.
"We will continue to push for transparency, efficiency and fairness in the market and that includes a ban on all incentive payment structures," he said at the FPA annual conference in Melbourne last week.
Hourly fees in the industry, however, should not be mandated, according to Godfrey Pembroke's Peter O'Toole.
"I don't believe our profession should mandate for hourly fees. It does not even work for other industries. Even accountants and lawyers are moving away from such structures as it rewards incompetence and inefficiency," he said.
In particular, he said asset-based fees applied to investment portfolios should not be banned. He also said the ban on commissions will "run the risk of unintended consequences".
"I will acknowledge that too many clients have received poor advice due to high commissions, however, we still have many good advisers who work on commission," he said.
"If trail commissions remain, I would recommend that advisers provide their clients with an ongoing service contract," he said.
Parliamentary Joint Committee on Corporations and Financial Services chair Bernie Ripoll also hinted that the the issue of the tax deductibility of advice will be examined in its inquiry into financial products and services.
"The tax deductibility of advice creates a whole suite of issues. Perhaps the issue may not be addressed today but it will definitely be covered when the inquiry delivers its recommendations," he said.
The recommendations from the inquiry will be handed down today.
